I think we’ve all been bombarded with so many news outlets screaming at retirees (such as myself) on the best ways we can cope with and manage inflation. The best tactic that has worked for me was to go through my expenses, cut back on non-essentials, eliminate vacations and just stay right at home. I don’t have any holdings in the stock market so whatever happens on Wall Street doesn’t bother me or my non-existent 401K (because I never had any).
Since I live my live so frugally, there really wasn’t much I could cut out of my budget except maybe a few streaming services. I already pay low cost cell service, I cook from scratch, have no magazine subscriptions and haven’t had cable in perhaps a decade. I’m not switching my vehicle insurance because I don’t want to start over with another company. I already started over with a new company four years ago and I’m confident enough in their insurance strategies there’s no need for me to change.
Nonetheless in just four months, my standard monthly expenses went from $3,276 as of December 31, 2021 to $3,652 as of April 30, 2022. That is an increase of $376 (11.5%) a month due to health insurance (Medicare), energy costs (heating the house), gas for the car, some groceries (I still keep the amount between $450 to $500 a month) and electricity. I could have easily covered this deficit by requesting one of my investments deposit the monthly interest payment into my checking account rather than be compounded. But I didn’t. Instead, my husband went back to work part-time and we chose NOT to touch any of our investments. We’ll just keep saving money for use much later in our retirement years (when we become incapacitated, etc.)
Living debt free, mortgage free, with no car loans or credit card debt has also been extremely beneficial in our retirement challenges. However, we still have inflationary bills to pay regardless of how much we cut back. Apparently, I seem to be on the right track because this recent article from Forbes Magazine confirms many of the tactics I currently employ (click here). For example:
Make A Short-Term Plan
The most important thing retirees today can do is to draw up a short-term plan to deal with inflation. This may require postponing travel plans, changing how they shop, rethinking where and how often they eat out and scaling back charity and gift giving. Taking the time to think through the life choices they make every day and deciding what is essential, what is wanted and what they can give up, can free up necessary dollars to cover the added strain of inflation.
Retirees should take an hour or two to examine their credit card and bank statements and write down in large categories how much they have spent in each category for the past couple of months. Categories should include gas, restaurants, clothing and travel.
Label each item with a one, two or three. Ones are essential to enjoyment of life. Twos may not be essential but are really wanted. Threes are things retirees can live without until inflation is back under control.
Immediately get rid of the threes to see if that frees up enough monthly cash flow to absorb the higher costs of ones and twos. Common types of threes for many people may include magazine subscriptions, premium cable channels, gym memberships, fast food visits and day trips.
Look at your twos, or “wants.” One of the biggest is dining out. To lower this expense, look for buy-one-get-one-free restaurant promotions, early-bird specials and coupons, or decide once a week to get together with another couple at home instead of going out.
Stop shopping for nonessential items like clothing, household décor and gifts for children or grandchildren. You need not give this up entirely, just scale back and look for shopping center, big-box warehouse or online discount shopping sites to find clearance items, end-of-season sales, etc.
A big area where people can save is travel. Look for destinations within an hour or two drive to avoid airfares, parking fees and rental car costs, and use credit card points for hotels. Or try a staycation, relaxing at home, enjoying local attractions and saving a considerable amount of money in the process.
“Living within your means, following the advice of your physician and dentist, not carrying debt, and earning the best yield available on your bank savings are all critical actions for keeping money in your pocket,”
I have to admit that many of the cutbacks I have made plus the added income my husband is bringing in has made a substantial difference in our quality of life. The strongest choice was deciding what was essential and what was non-essential. What was most important, to us, was saving money. Hubby’s last two years of possible employment was put on hold due to the pandemic. He’s quickly catching up on that loss by taking on a part-time job. We’re covering our deficit as well as increasing our savings for our future. Yes, my fellow retirees…..we still have a future. Life is long and retirement is longer.
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